Ambac Financial Group, Inc. (NYSE:AMBC) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Ambac Financial Group shares have been sold down a little recently, so investors may be hoping the latest upgrade changes the market's appetite for the business. At US$7.89, the stock is 5.3% below where it was a week ago.

Following the upgrade, the consensus from lone analyst covering Ambac Financial Group is for revenues of US$171m in 2022, implying a disturbing 31% decline in sales compared to the last 12 months. Losses are supposed to balloon 247% to US$3.28 per share. Yet prior to the latest estimates, the analyst had been forecasting revenues of US$133m and losses of US$4.16 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

View our latest analysis for Ambac Financial Group

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. Over the past five years, revenues have declined around 25% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 39% decline in revenue until the end of 2022. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.4% per year. So while a broad number of companies are forecast to grow, unfortunately Ambac Financial Group is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing here is that the analyst reduced their loss per share estimates for this year, reflecting increased optimism around Ambac Financial Group's prospects. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. More bullish expectations could be a signal for investors to take a closer look at Ambac Financial Group.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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